Geothermal booming, private potential for solar considerable

Taking into account increasing power demand, more than 19 GW electric power generation capacities shall be built until 2030 (~2.2 GW installed capacities by end 2014). For the first time electricity production from geothermal resources overtook electricity from hydro in 2015. The government puts a special perspective on the development of geothermal energy resources. Priority is also given to the expansion of wind resources. Geothermal energy is considered to be the least cost option (0.69 US$/ kWh), followed by wind (0.92 US$/ kWh). Therefore, 30% of the electricity is thought to originate from geothermal resources by the year 2030. Until mid-2015 more than 0.7 GW of electricity production from geothermal resources have been installed. Wind is supposed to contribute 15% to the power generation in 2030. Debited to erratic rains and drought the power supply shall be diversified away from hydro, but apart from investments in renewable energy technologies, conventional power production possibilities are on the agenda, too.

However, some challenges have to be addressed in order to achieve especially the geothermal targets: The construction of geothermal power plants requires the reliable availability of steam in a certain quality and quantity. Many steam fields are not yet well explored, so that high risks are associated to the exploration drillings. However, the current (2015) production hub Olkaria showed considerable activities of going online in 2014. Within a short time frame power production from geothermal has increased multiple times. There are business opportunities for suppliers along the whole value chain (drilling equipment, drilling services, steam pipeline systems, turbines, cooling, transmission, substations etc.). Key stakeholders are the Kenya ElectricityGenerating Company Ltd. (KenGen) as national power utility and concessionaire of Olkaria and the Geothermal Development Corporation (GDC) as concessionaire and developer of the area in Menengai, Bogoria and other regions.

With regard to wind projects of around 600 MW have been approved in 2012, but just a few are in an advanced stage. The (in)famous Lake Turkana Wind Power Project has seen first construction efforts after massive delays in 2015, first power to be produced in 2016. Among other reasons, absorption capacity of the national grid, respectively the extension of the transmission grids has been the reason for the delay.

Solar-PV plays an important role for decentralized solutions, not only off-grid but also grid-connected: While in the past years solar-PV systems were installed in households and public institutions like schools, health centers, administration offices, the commercial/ industrial sector gains importance and increasingly realizes its potential. Some agrobusiness companies have already invested in solar-PV systems. Conducive market conditions such as a functioning net-metering scheme are on the agenda to be implemented. In addition, hybrid solar-PV-Diesel minigrids are increasingly being seen. Key stakeholders are the Rural Electrification Agency (REA), but also leading companies in the private sector as well as potential investors.

The worst bottleneck in the Kenyan power sector is the grid, which is prone to many power outages and technical/ non-technical losses. Kenya Power and Lightning Company Ltd. (KPLC) as major grid operator has realized the need to make the grid more reliable and smarter. Beyond the extension of the grid (~3,200 km new distribution lines and new substations of 4,200 MVA are planned for the period 2012-2016), some projects have already been implemented and/ or are ongoing to make the grid smarter. In addition, remote reading meters for large commercial and industrial customers have been installed. Projects in planning are for instance the further automation of Nairobi (including 66 kV switches) and of other cities (e.g. Kisumu) as well as the roll-out of prepaid meters.

Another field of activity, where German companies can bring in their products and solutions, is to enhance energy efficience on the demand-side: The industrial energy saving potential is estimated to be up to 30% (i.e. cement industry, agro-industry, water supply). Due to high power tariffs, which are by tendency cost-reflective, and comprehensive energy audit program in the last 10 years industrial energy consumers are already quite aware of the importance to save energy. The government is currently increasing regulative pressure on business with more than 180 MWh p.a. electricity demand.